Can Cisco Catch up with the Big Cloud Players?
Cisco, the world’s largest maker of networking equipment, is gearing up for the changing tech landscape.
First off, as more companies move to the cloud, their need for networking equipment falls greatly. They no longer need so many routers and switches and in turn, this is affecting the sales of Cisco’s core business. Even those companies that invest in infrastructure don’t seem to need an end-to-end networking gear, like in the past. All that they need now is precise equipment that fits well with their requirements.
All this means, Cisco’s existing operations and business structure is taking a beating. During the 2000s, technology and networking was expanding rapidly and Cisco simply rode that boom with its advanced networking equipment. it even became one of the most valuable company during that time.
But the picture is a lot different today. It’s now more about creating a niche and finding specialized equipment for that niche instead of building a complete networking solution from scratch.
To keep pace with the changing trends, Cisco moved into the cloud market to manufacture its equipment for cloud service providers like Amazon and Microsoft. It seemed like a good move then because Cisco simply decided to do what it knows best.
Unfortunately for Cisco, it didn’t work simply because cloud providers too wanted specialized equipment and not the general networking gear the Cisco specializes in. As a result, specialized network vendors like Artista looked more attractive than Cisco.
To top all these woes, software is becoming more central to cloud and even possibly IoT and machine learning because hardware is saturated and growing in an altogether different dimension. The focus is slowly moving towards sensors and other finer equipment rather than general networking.
So where does all this leave Cisco now?
Chuck Robbins, the new CEO of Cisco, is taking all out efforts to bring more relevance to Cisco. Robbins took helm in July 2015 and since then, has been entering into agreements to make custom products for different companies.
In addition to it, Cisco is also strengthening its software and service businesses, so it can generate a more stable and steady income from it. To this end, it has even made some acquisitions. It bought a company called AppDynamics that makes software to monitor the performance of corporate applications. It bought his company for a whopping $3.7 billion. Likewise, it bought a company called Viptela for $610 million, to tap into its expertise of making programs to manage different networks.
It has also taken the route of subscriptions, so many of its products are available under this pricing model. This is to keep pace with the new model of selling products to its customers.
All these changes have helped Cisco to some extent, as it continues to be a key hardware manufacturer for the new age tech industry.
Let’s hope it continues to build on these initiatives, so it can use its vast experience and expertise to fuel the growth of cloud and other new technologies that are likely to transform our society in a big way.